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Monday, July 29, 2013
Unemploy An Illegal: Bring On The Lettuce Bots!
Story here:
"Technology is about to take over America's fruited plains - robots, it seems, are all the rage down on the farm, and their introduction and spread will make human farm work a thing of the past."
Home Prices Still Too High: Nationally 24% Pay More Than Half Their Income On Housing
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| Case Shiller Home Price Index @multpl.com |
Joel Kotkin reflects on the still expensive housing market here:
Ownership levels continue to drop, most notably for minorities, particularly African Americans. Last year, according to the Harvard study, the number of renters in the U.S. rose by a million, accompanied by a net loss of 161,000 homeowners.
This is bad news not only for middle-income Americans but even more so for the poor and renters. The number of renters now paying upward of 50% of their income for housing has risen by 2.5 million since the recession and 6.7 million over the decade. Roughly one in four renters, notes Harvard, are now in this perilous situation. The number of poor renters is growing, but the supply of new affordable housing has dropped over the past year. ...
According to the Center for Housing Policy and National Housing Conference, 39% of working households in the Los Angeles metropolitan area spend more than half their income on housing, 35% in the San Francisco metro area and 31% in the New York area. All of these figures are much higher than the national rate of 24%, which itself is far from tolerable.
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Kotkin nowhere mentions that currently expensive housing is explicit Federal Reserve policy. ZIRP and QE are specifically designed to reduce long term interest rates to make home mortgages affordable. Instead those policies have re-inflated housing prices to their historical highs before the bubble and reversed the downward trajectory of price resetting those prices were on.
In June 2013 dollars, the Case Shiller Home Price Index reached its low point after the bubble at 126.30 for the quarter ended March 31, 2012. That level hadn't been seen since June 1998. But from the long term perspective prices should have reset to 120 on the index or lower as they have in the past. This expectation holds even more considering the excesses of the bubble which needed to be wiped out, but haven't been.
The Fed has done nothing but interfere with the free market in housing, creating the bubble in the first place and preventing its deflation now. To fix the problem, the Fed needs at a minimum to focus solely on price stability by maintaining a strong dollar. Markets will take care of themselves after that.
Sunday, July 28, 2013
Dear Christopher Buckley: "Go Away" Is Not A Solution, Unless You're A WASP
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| Occupy Wall Street: The Mirror Image Of Congress |
'There’s a phrase in journalism-speak called “burying the lede,” which Leibovich appears to do by waiting until Page 330 to cite this arresting figure (previously reported by The Atlantic): in 1974, 3 percent of retiring members of Congress became lobbyists. “Now 50 percent of senators and 42 percent of congressmen do.” No one goes home anymore. Cincinnatus, call your office. ... By the end, one is left thinking that our country would be so much better off if, after putting in their years of “public service,” all these people would just go home. Or just away. But then what would we do for entertainment, being left with a mere Parliament of Bores?'
When the US Congress and the executive conspired way back in the 1920s to restrict representation to 435 in the US House to repress the growing political influence of the grown large immigrant population, mostly from Europe, which they also evidently wished "would just go home" or "away", it merely pushed on a string. So that today instead of worse representation we have representation of the worst sort: lobbyists whom we cannot dislodge at election time, and the 435 people who depend on them for campaign financing whom we cannot dislodge, either.
Today we should have a US House of Representatives of 10,490. Instead we had in 2012 12,411 registered lobbyists, and the 435 mopes the lobbyists, and we, routinely return to Washington, DC.
Representation is messy, but we desperately need more of it as the founders intended, not less.
Presidents Ranked By Level Of Income Inequality: Gini Ratio Of Families, End Of Term
1. .349 JFK/LBJ (least income inequality)
2. .359 Truman
3. .363 Nixon/Ford
4. .369 Carter
5. .374 IKE
6. .401 Reagan
7. .429 Bush 1
8. .435 Clinton
9. .443 Bush 2
10. .450 Obama, to date (most income inequality)
The IRS Is Obstructing The Investigation Into Its Crimes
Peggy Noonan here:
House investigators this week said they have in fact received less than 1% of the documents they have been asking for from the agency. The IRS itself at one point identified a whopping and rather intimidating 65 million documents that might be relevant to the tea-party scandal. To date—almost three months since the scandal became public—the House Ways and Means Committee says the IRS has turned over only 13,000 pages. And some of them were duplicates. It's gone beyond what staff aides were, last month, calling "slow walking." Chairman Dave Camp said in a statement the IRS's actions look "a lot like obstruction." One aide said: "Patience is wearing thin."
Presidents Ranked By Change Of Income Gini Ratio Of Families In Post-War
1. JFK/LBJ -6.6%
2. Truman -5.0%
3. Clinton +1.3%
4. Obama +1.5% (to date)
5. Carter +1.6%
6. Bush2 +1.8%
7. Nixon/Ford +4.0%
8. IKE +4.1%
9. Bush1 +6.9%
10. Reagan +8.6%
Inequality of market income decreased most under Kennedy/Johnson and increased most under Reagan. The measure is before taxes and transfers, however. The Organization for Economic Cooperation and Development figures after taxes and transfers for certain periods may be observed here. See the helpful discussion by Tim Worstall, here, including this:
"[E]ven in the post-tax and post-benefit numbers the US is still an outlier in the statistical methods used. In looking at inequality, poverty, in the US we include the cash that poor people are given to alleviate their poverty. But we do not include the things that people are given in kind: the Medicaid, SNAP, Section 8 and so on. It’s possible (I’m not sure I’m afraid) that we don’t include the EITC either. We certainly don’t in the poverty statistics but might in the inequality. All of the other countries do include the effects of such policies. Largely because they don’t offer benefits in kind they just give the poor more money and tell them to buy it themselves. This obviously turns up in figures of how much money the poor have."
The president might want to consider that Bill Clinton did a better job of reducing income inequality than he has. But, then again, Bill Clinton did a better job than Obama in most everything, and ranks number two behind Truman overall for the best economy in the post-war.
Friday, July 26, 2013
If QE Is Helping Only The Financial Sector, Maybe It Was Meant To
Robert Skidelsky in The Economist here, referencing John Kay in the Financial Times:
"All of this led John Kay to wonder why so much attention was given to unconventional monetary policies ‘with no clear explanation of how they might be expected to work and little evidence of effectiveness?’ His answer: they are helpful to the financial services and those who work in them."
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QE is medicine for sick banks, not sick economies.
Corporate Cash Sets Another Record At $1.093 Trillion, Liabilities Climb To $5.9 Trillion
Bob Pisani reports here:
"Cash set a record in the first quarter of 2013 on an absolute basis: $1.093 trillion in the S&P 500. It has set a record for 18 of the last 20 quarters."
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Yeah, but nonfinancial corporate business sector bond liabilities have climbed, too, from $3.7 trillion in 2007 to $5.9 trillion in the latest report.
Financial business sector bond liabilities have declined from $6.2 trillion to $4.9 trillion over the same period.
Thursday, July 25, 2013
Did Bernanke Honestly Think Employment Was Improving Significantly On May 22nd?
The more I think about the first time claims for unemployment data this year, I think it's very possible Ben Bernanke got a little ahead of himself on May 22nd with his admittedly mere hint of tapering, thinking there was real improvement in the unemployment picture. And there seemed to be.
In the run up to his May 22nd comments, there had been a string of 13 weeks averaging 320,538 first time claims per week, which translates into an annualized level of 16.6 million, something this country hasn't seen since 2006-2007 under George W. Bush, two years which were the best this country had seen the whole decade, and remain so. In other words, Ben Bernanke may have felt free to hint at tapering bond purchases later in the year if the numbers over the three months which he had just witnessed carried forward through the rest of the year. Entirely understandable.
Everybody went nuts over the tapering remark, which was really just a response to Rep. Brady's question. But Ben must have been seeing what careful observers were seeing: some of the best first time claims data of Obama's presidency. That said, the number of careful observers are few, and most people do not think much about the not-seasonally-adjusted numbers, let alone the long term comparisons.
Things have deteriorated since then, of course, but in the late winter and early spring, first time claims for unemployment were in fact looking much better.
QE-Induced Savings On Interest Expense Accounts For 47% Of S&P500 Earnings Growth Since '09
So says Robbert van Batenburg, quoted here:
"People underestimate the extent to which quantitative easing has benefited the S&P," said Robbert van Batenburg, director of market strategy at brokerage Newedge USA LLC in New York. He called the effect akin to "an athlete on steroids." The Fed's effect on corporate earnings is difficult to quantify. Van Batenburg estimates that corporate savings on interest expense after rates fell to historic lows has accounted for about 47 percent of S&P 500 earnings growth since 2009. At the end of 2009, quarterly earnings per share for the S&P 500 were less than $20, and companies in the index paid about $4 a share in interest, van Batenburg said. Now the S&P 500 is generating about $26.70 a share in quarterly earnings but pays just $1.50 a share in interest.
Revenues Show Global Economy In Full Retreat
Jeffrey Snider, here:
What feels like a still-recovering recovery to so many looks far different in comparison to the real recession that was already in full swing in 2008 – the fact that so many companies and so much of the economy is running below 2008 rates is very revealing and startling in its implication. It should be even more remarkable aside the fact that QE 3 & 4 are right now being pushed into “markets”, and that a renewed housing bubble is building next to myriad other asset bubbles.
There is no hiding the fact that the global economy, including the US, is in full retreat. Investors and observers may choose to ignore it, but that just makes their game of waiting for recovery all the more curious.
Wednesday, July 24, 2013
Economic Stress: Almost Half Of TARP Funded Mortgage Mods Redefault
As reported here:
While HAMP has helped about 865,100 homeowners avoid foreclosure over the lifetime of the program through permanent loan modifications, more than 306,000 homeowners had redefaulted on their modified mortgages as of the end of April, the report stated.
Supremes Slap Down Imperial Obama 3x In Last 18 Months In Property Cases 9-0
Story here:
"Horne was the administration's third unanimous defeat in a property rights case in 18 months."
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It's not just the Fifth Amendment which has been under attack by the Obama regime, either. The Supremes also handed down two unanimous defeats in First and Fourth Amendment cases in 2012.
America, are you listening? Your president hates your constitution.
Tuesday, July 23, 2013
How Bernanke Moved Mortgage Rates Up Nearly 25% On May 22nd
Quoted here May 22nd:
“If we see continued improvement [in the labor market] and we have confidence that that is going to be sustained, then we could in -- in the next few meetings -- we could take a step down in our pace of purchases.”
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The rate was 3.51% on May 16th. On July 18th it's 4.37%.
IRS Political Targeting Scandal Goes All The Way To The Top
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| pappastax.com April 2009 |
Peggy Noonan, last week here:
The IRS scandal was connected this week not just to the Washington office—that had been established—but to the office of the chief counsel. That is a bombshell ... Mr. [Carter] Hull told House investigators that at some point in the winter of 2010-11, Ms. [Lois] Lerner's senior adviser, whose name is withheld in the publicly released partial interview transcript, told him the applications would require further review:
Q: "Did [the senior adviser to Ms. Lerner] indicate to you whether she agreed with your recommendations?"
A: "She did not say whether she agreed or not. She said it should go to chief counsel."
Q: "The IRS chief counsel?"
A: "The IRS chief counsel."
The IRS chief counsel is named William Wilkins. And again, he is one of only two Obama political appointees in the IRS.
Monday, July 22, 2013
John Kass: Obama Played The Race Card On Purpose To Divide America
John Kass, Greek-American, channels Aristotle here in the Chicago Tribune:
Obama pronounced the killing as racially motivated, though he didn't use the words. He didn't have to, such is his prowess. It was so smooth that few noticed. He put the killing in a racial context, and that was enough. ... Race was established by the president of the United States, and by other political and media actors. It's a cynical business, about money and power, about keeping divisions between American tribes. There are the black tribes that see Martin in the context of the old civil rights struggles and leverage, and white tribes that see Martin being used to pummel them with racial guilt. ... Yet none of this tribalism has anything to do with what happened the night Martin was killed. Politicians don't worry about that. They're experts at the game of tribes, and a tribal America is what nourishes them.
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"The tyrant should endeavor that the whole community should mutually accuse and come to blows with each other." -- Aristotle, Politics V
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